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COAL OF AFRICA LIMITED - Financial Report for the half year ended 31 December 2013

Release Date: 10/03/2014 09:00
Code(s): CZA     PDF:  
Wrap Text
Financial Report for the half year ended 31 December 2013

Coal of Africa Limited 
(Incorporated and registered in Australia) 
Registration number ABN 008 905 388 
ISIN AU000000CZA6 
JSE/ASX/AIM share code: CZA 
("CoAL or the "Company" or the "Group") 

FINANCIAL REPORT
FOR THE HALF YEAR ENDED
31 DECEMBER 2013

CORPORATE DIRECTORY

REGISTERED OFFICE      Suite 8, 7 The Esplanade
                       Mt Pleasant, Perth, WA 6153
                       Telephone: +61 8 9316 9100
                       Facsimile: +61 8 9316 5475
                       Email: perth@coalofafrica.com

SOUTH AFRICAN OFFICE   South Block
                       Summercon Office Park
                       Cnr Rockery Lane and Sunset Avenue
                       Lonehill
                       Telephone: +27 10 003 8000
                       Facsimile: +27 11 338 8333

BOARD OF DIRECTORS     Non-executive
                       Bernard Pryor (Appointed to role of Chairman on 1 February 2014)
                       Peter Cordin
                       David Murray
                       Khomotso Mosehla
                       Rudolph Torlage

                       Executive
                       David Brown (Appointed to role of CEO on 1 February 2014)
                       Michael Meeser

COMPANY SECRETARY      Tony Bevan

           AUSTRALIA                         UNITED KINGDOM                SOUTH AFRICA
AUDITORS   Deloitte Touche Tohmatsu          N/A                           Deloitte & Touche
           240 St Georges Terrace                                          Deloitte Place
           Perth WA 6000                                                   Building 1
           Australia                                                       The Woodlands
                                                                           20 Woodlands Drive
                                                                           Woodmead 2052
                                                                           South Africa

BANKERS    National Australia Bank Limited   Investec Bank plc             ABSA Bank
           Level 1, 1238 Hay Street          2 Gresham Street              The Podium
           West Perth WA 6005                London EC2V 7QP               Norton Rose Building
           Australia                         United Kingdom                15 Alice Lane
                                                                           Sandton South Africa

            AUSTRALIA                        UNITED KINGDOM                SOUTH AFRICA
BROKERS     Euroz Securities Limited         Investec Bank plc             N/A
            Level 18, Alluvion               2 Gresham Street
            58 Mounts Bay Road               London EC2V 7QP
            Perth WA 6000                    United Kingdom
            Australia
                                             Mirabaud
                                             21 St James' Street
                                             London SW1Y 4JP
                                             United Kingdom

LAWYERS     Corrs Chambers Westgarth         Hogan Lovells International   Edward Nathan
                                             LLP                           Sonnenbergs
            Governor Phillip Tower           Atlantic House                150 West Street
            1 Farrer Place                   Holborn Viaduct               Sandton
            Sydney, New South Wales          London EC1A 2FG               Johannesburg 2196
            2000                             United Kingdom                South Africa
            Australia

NOMAD/      N/A                              Investec Bank plc             Investec Bank Limited
CORPORATE
                                             2 Gresham Street              100 Grayston Drive
SPONSOR
                                             London EC2V 7QP               Sandown 2196
                                             United Kingdom                Johannesburg
                                                                           South Africa
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

The Directors of Coal of Africa Limited ("CoAL" or "the Company") submit herewith the financial report of Coal of Africa
Limited and its subsidiaries ("the Group") for the half-year ended 31 December 2013. All amounts expressed in US Dollars
unless stated otherwise.

In order to comply with the provision of the Corporations Act 2001, the directors report as follows:

Directors

The Names of the directors of the company during or since the end of the half-year are:

Name
Bernard Pryor* (Chairman)
Peter Cordin*
David Murray*
Khomotso Mosehla*
Rudolph Torlage*
David Brown**
Michael Meeser**

* Non-executive director
** Executive director
The above named directors held office during and since the end of the half-year.

Review of Operations

Principal activity and nature of operations
The principal activity of the Company and its subsidiaries is the acquisition, exploration and development of thermal and
metallurgical coal properties in South Africa.

The Company's principal coking and thermal coal assets and projects include:

-     The near-term development project, the Vele Colliery;
-     The Makhado Project and the Greater Soutpansberg Project ("GSP") comprising three exploration stage coking and
      thermal coal projects, namely The Chapudi, Mopane and Generaal Projects; and
-     Two non-core thermal assets, the Woestalleen and Mooiplaats collieries which are classified as ‘Operations held for
      sale'.

Operations
The Company's focus on safety continued and no lost time incidents ("LTIs") were recorded during the reporting period
(FY2013 H1: 10 LTIs).

The restructuring of CoAL continued during the period and resulted in the disposal of the Woestalleen Complex near
Middelburg in Mpumalanga. The Company satisfied suspensive conditions of the transaction and by the end of December 2013, 
only the conditions requiring regulatory approval were outstanding. This was received at the end of January 2014 with the 
flow of funds in March 2014. The Opgoedenhoop New Order Mining Right ("NOMR") previously formed part of the Woestalleen 
Complex and was subject to a separate disposal process. The Company is awaiting regulatory approval for the transaction, 
expected in Q1 CY2014.

The Mooiplaats Colliery (near Ermelo) in Mpumalanga was placed on care and maintenance in August 2013, at which time it
was producing Eskom quality coal only. The colliery is undergoing a formal disposal process which is expected to be
completed during CY2014. During December 2013 the Company agreed to sell the Holfontein thermal coal project near
Secunda, also in Mpumalanga, and received an option fee of ZAR5 million (US$0.5 million) for a one year option, extendable
for further periods on the payment of additional option fees. The Company expects the buyer to exercise its option in CY2014
and once legislative approval for the transaction is granted, the purchase price of ZAR50 million (US$4.8 million) will become
payable to CoAL.

During the six months ended December 2013, CoAL converted its interest in ASX listed Lemur Resources Limited into Bushveld 
Minerals Limited ("Bushveld") shares. Bushveld is listed on AIM (London) and CoAL is in the process of disposing of these 
shares, expected to be completed in CY2014.

As well as the restructuring of its various non-core assets, CoAL undertook processes to decrease overhead costs which
included a reduction in staff numbers at its corporate office as well as its projects. These processes were completed by July
2013 and together with the relocation of the corporate office in Johannesburg, resulted in significant cost savings.

A further step in the turnaround strategy required the confirmation of the Vele Colliery coal quality. During the period the
Company supplied samples of semi-soft coking coal to ArcelorMittal South Africa Limited ("AMSA") for tests in their coke
batteries. The semi-soft coking coal test results were favourable, (meeting all of AMSA's technical requirements) and in 
January 2014 the Company received a Letter of Intent ("LoI") for the supply of coal. Both AMSA and CoAL wish to convert the 
LoI into a formal off-take agreement dependent on agreement on pricing parameters. Furthermore Eskom, the state power utility,
successfully undertook combustion tests on Vele thermal coal and the parties are to hold further discussions with regards to
a potential off-take agreement.

In terms of South African mining legislation, the Company requires a 26% Black Economic Empowerment ("BEE")
shareholding for its mining and exploration projects. The Company is at an advanced stage of finalising agreements to
enable a broad based BEE consortium (including communities and future employees) to acquire 26% of the Makhado
Project. The Company estimates the Makhado Project Net Present Value to be in excess of ZAR6.9 billion (US$ 656.9 million) 
and is planned to produce over two million tonnes per annum ("Mtpa") of hard coking coal and over three Mtpa of Eskom quality 
thermal coal. The construction of the project, including ramp-up, is expected to take 26 months commencing in CY2015 and has 
an initial life of mine of 16 years. The inclusion of a BEE shareholder ensures that the project has the requisite corporate 
structure for the granting of the NOMR and in time, the Makhado Project will benefit one of the poorest areas in South Africa.

Vele Colliery Plant Modification
The confirmation of the Vele coal's semi-soft coking coal characteristics by AMSA during the reporting period resulted in the
scaling down of operations in anticipation of the processing plant modifications. The Company approached potential
contractors for the detailed design and construction of the modification and in February 2014, appointed Sedgman South
Africa ("Sedgman") to complete the three month front-end engineering and design ("FEED"). The FEED will enable CoAL to
arrive at a class 1 EPC estimate and once complete, will increase the processing capacity to 2.7 Mtpa of run of mine ("ROM")
coal and the simultaneous production of three products, namely:

-    Semi-soft coking coal;
-    Sized thermal coal for the regional market; and
-    Thermal coal for Eskom.

The Vele Colliery has a life of mine in excess of 50 years. The Company estimates that it will cost approximately ZAR450.0
million (US$42.8 million) to complete the plant modification (including mine development and ramp up costs), funded by 
a combination of debt and equity, and has commenced discussions with South African financing institutions which is expected 
to be agreed by the end of Q1 CY2014. Plant modifications will be completed in H1 CY2015, followed by a three month 
ramp-up period.

Current and future funding
During the reporting period the balances outstanding under the Deutsche Bank trade finance facility and the Investec Bank
Limited ("Investec") derivative facility were repaid. Furthermore the Company secured a ZAR210.0 million (US$20.0 million)
facility from Investec in October 2013 and has drawn ZAR107.0 million (US$10.2 million) of this for general working capital
requirements. The Investec facility will be repaid using the proceeds from the disposal of non-core assets.

The Company has a long term project pipeline and the modification of the Vele plant and the development of the Makhado
Project will be followed by the development of the GSP project areas. The development of the Company's significant coking
and thermal coal resources is expected to be funded by a combination of debt and equity.

Financial review
The loss for the six months under review amounted to US$46.3 million, or 4.42 cents per share compared to a loss of
US$111.7 million, or 14.39 cents per share for the prior corresponding period.

The loss for the period under review of US$46.3 million (2012: US$111.7 million) includes non-cash charges of US$30.3
million (2012: US$96.1 million) as follows:

- impairment loss of US$16.5 million (US$50.0 million in the six months ended 31 December 2012);
- net foreign exchange losses of US$12.6 million (2012: US$19.9 million) arising from the translation of inter-group loan
  balances, borrowings and cash due to changes in the ZAR:AUD exchange rate during the period;
- depreciation of US$0.7 million (2012: US$9.8 million) and amortisation of US$0.5 million (2012: US$9.4 million)
  contributed further to the non-cash charges;
- loss of nil due to the discount on early settlement of the Grindrod receivable (2012: US$2.7 million); and
- loss of nil (2012: US$4.3 million) on the fair value adjustment of the Investec equity derivative financing package.

As a result of the exclusion of impairment losses from the headline earnings calculations, the headline loss per share (as
explained in note 12 to the financial report) reduced from 7.95 cents in the prior corresponding period, to 2.85 cents per
share during the six months under review.

As at 31 December 2013, the Company had cash and cash equivalents of US$4.2 million compared to cash and cash
equivalents of US$29.9 million at 30 June 2013.

Authorised and issued share capital

CoAL had 1,048,368,613 fully paid ordinary shares in issue as at 31 December 2013. The holders of ordinary
shares are entitled to one vote per share and are entitled to receive dividends when declared.

Dividends
No dividends were declared or paid during the six months.

Highlights and events after the reporting period

- On 31 January 2014, the Department of Mineral Resources ("DMR") granted Section 11 approval in terms of the Mineral and
  Petroleum Resources Development Act ("MPRDA") for the disposal of the Woestalleen Complex. The sale consideration of 
  ZAR80 million (US$7.6million) was received on 6 March 2014.
- David Brown was appointed as Chief Executive Officer ("CEO") and Executive Director and Bernard Pryor was appointed
  Chairman, effective 1 February 2014.
- Appointment of Sedgman as the engineer for the FEED of the Vele Colliery plant modification.

Outlook
Good progress has been made on all elements of the turnaround strategy. The placement of the loss making Mooiplaats
Colliery on care and maintenance and the commencement of a formal sales process, as well as the disposals of the 
Woestalleen Complex, Holfontein project and Bushveld investment are at various stages of completion and are all expected 
to be completed during CY2014. The confirmation of the Vele Colliery semi-soft coking coal qualities by AMSA could, subject 
to the requisite funds being raised, result in the commencement of the project's processing plant modifications, 
expected to be completed in H1 CY2015. The granting of the Makhado Project NOMR is expected to occur in CY2014 with the 
26 month construction period commencing in CY2015, again subject to the required funding being available.

Rounding off of amounts
The company is a company of the kind referred to in ASIC Class Order 98/100, date 10 July 1998, and in accordance with
that Class Order amounts in the directors' report and the half-year financial report are rounded off to the nearest thousand
dollars, unless otherwise indicated.

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out on
page 28.

The half-year report set out on pages 8 to 27, which has been approved on the going concern basis, was approved by the
board on 9 March 2014 and was signed on its behalf by:

David Brown
Director

Dated at Johannesburg, South Africa, this 9th day of March 2014.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

                                                                     Six months       Six months
                                                                          ended            ended
                                                                    31 Dec 2013      31 Dec 2012
                                                           Note           $'000            $'000

Continuing operations
Revenue                                                                     60              516
Cost of sales                                                              (76)            (898)
Gross loss                                                                 (16)            (382)
Depreciation and amortisation                                           (1,286)            (498)
Foreign exchange losses                                                (12,564)         (19,857)
Employee benefits expense                                               (4,116)          (7,477)
Other expenses                                                          (5,759)         (10,448)
Take or pay port obligation                                             (1,549)          (1,626)
Operating lease expenses                                                  (174)            (545)
Other (loss) and gain                                                        -           (4,299)
Other income                                                               388                -
Operating loss                                                         (25,076)         (45,132)
Interest income                                                            371              353
Finance costs                                                             (285)              (8)
Loss before tax                                                        (24,990)         (44,787)
Income tax credit / (charge)                                                  -                -
Net loss for the period from continuing operations                     (24,990)         (44,787)
Operations held for sale
Loss for the period from operations held for sale           11         (21,306)         (66,883)
LOSS FOR THE PERIOD                                                    (46,296)        (111,670)
Other comprehensive loss, net of income tax
Items that may be reclassified subsequently to profit or
loss
Exchange differences on translating foreign operations                  (3,672)          18,933
Total comprehensive loss for the period                                (49,968)         (92,737)

Loss for the period attributable to:
   Owners of the parent                                                (46,296)        (111,670)
   Non-controlling interests                                                  -                -
                                                                       (46,296)        (111,670)
Total comprehensive loss attributable to:
   Owners of the parent                                                (49,968)         (92,737)
   Non-controlling interests                                                  -                -
                                                                       (49,968)         (92,737)
Loss per share                                              12
From continuing operations and operations held for sale
   Basic and diluted (cents per share)                                     4.42            14.39

From continuing operations
   Basic and diluted (cents per share)                                     2.38             5.77

The accompanying notes are an integral part of these condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2013
                                                           31 Dec 2013     30 June 2013
                                                   Note          $'000            $'000
ASSETS
Non-current assets
 Development, exploration and evaluation assets     6          274,190          279,078
 Property, plant and equipment                      7           17,019           18,846
 Intangible assets                                              15,087           16,078
 Other receivables                                               3,358            3,567
 Other financial assets                                          2,678            2,989
 Restricted cash                                                 3,939            4,187
 Deferred tax assets                                             2,714            2,885
Total non-current assets                                       318,985          327,630

Current assets
 Inventories                                                       544            1,096
 Trade and other receivables                                     4,645            3,267
 Other financial assets                                              -            3,318
 Cash and cash equivalents                                       4,067           20,995
                                                                 9,256           28,676
Assets classified as held for sale                  8           32,232           71,093
Total current assets                                            41,488           99,769

Total assets                                                   360,473          427,399
LIABILITIES
Non-current liabilities
  Deferred consideration                                             -           30,000
  Provisions                                                     4,647            4,903
Total non-current liabilities                                    4,647           34,903

Current liabilities
 Deferred consideration                             9           30,000                -
 Trade and other payables                                        5,582           10,837
 Borrowings                                        10            9,160            2,088
 Provisions                                                        343              398
 Current tax liabilities                                         1,489            1,534
                                                                46,574           14,857
Liabilities associated with assets held for sale    8           14,724           35,171
Total current liabilities                                       61,298           50,028

Total liabilities                                               65,945           84,931
NET ASSETS                                                     294,528          342,468

EQUITY
Issued capital                                                 935,891          935,891
Accumulated deficit                                          (753,831)        (707,535)
Reserves                                                       111,893          113,537
Equity attributable to owners of the parent                    293,953          341,893
Non-controlling interests                                          575              575
TOTAL EQUITY                                                   294,528          342,468

The accompanying notes are an integral part of these condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013
                                                    Issued     Accumulated        Share        Capital       Foreign    Attributable          Non-       Total
                                                   capital         deficit        based        profits      currency    to owners of   controlling      equity
                                                                                payment        reserve   translation      the parent     interests
                                                                                reserve                      reserve
                                                     $'000           $'000        $'000          $'000         $'000           $'000         $'000       $'000

Balance at 1 July 2013                             935,891       (707,535)       82,438             91        31,008         341,893           575     342,468
Total comprehensive loss for the period                  -        (46,296)            -              -       (3,672)        (49,968)             -    (49,968)
Loss for the period – continuing operations              -        (24,990)            -              -             -        (24,990)             -    (24,990)
Loss for the period – operations held for sale           -        (21,306)            -              -             -        (21,306)             -    (21,306)
Other comprehensive loss, net of tax                     -               -            -              -       (3,672)         (3,672)             -     (3,672)

                                                   935,891       (753,831)       82,438             91        27,336         291,925           575     292,500
Share based payments                                     -               -        2,028              -             -           2,028             -       2,028
Balance at 31 December 2013                        935,891       (753,831)       84,466             91        27,336         293,953           575     294,528

Balance at 1 July 2012                             791,102       (564,800)       87,180             91        63,119         376,692           575     377,267
Total comprehensive loss for the period                  -       (111,670)            -              -        18,933        (92,737)             -    (92,737)
Loss for the period – continuing operations              -        (44,787)            -              -             -        (44,787)             -    (44,787)
Loss for the period – operations held for sale           -        (66,883)            -              -             -        (66,883)             -    (66,883)
Other comprehensive loss, net of tax                     -               -            -              -        18,933          18,933             -      18,933

                                                   791,102       (676,470)       87,180             91        82,052         283,955           575     284,530
Shares issued for capital raising                   54,250               -            -              -             -          54,250             -      54,250
Share issue costs                                  (2,211)               -            -              -             -         (2,211)             -     (2,211)
Share based payments                                     -               -          481                            -             481             -         481
Share options expired                                    -           4,554      (4,554)              -            -                -             -           -
Balance at 31 December 2012                        843,141       (671,916)       83,107             91        82,052         336,475           575     337,050

The accompanying notes are an integral part of these condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013
                                                                    Six months ended         Six months ended
                                                                         31 December              31 December
                                                                                2013                    2012
                                                                               $'000                   $'000
Cash Flows from Operating Activities
Receipts from customers                                                       23,490                  90,279
Payments to employees and suppliers                                         (45,573)               (121,802)
Cash used in operations                                                     (22,083)                (31,523)
Interest received                                                                495                     342
Interest paid                                                                  (177)                   (676)
Income taxes paid                                                                  -                       -
Net cash used in operating activities                                       (21,765)                (31,857)

 Cash Flows from Investing Activities
Purchase of property, plant and equipment                                          -                 (2,395)
Increase in restricted cash                                                        -                 (1,475)
Proceeds from the sale of property, plant and equipment                            -                       -
Purchase of mineral properties                                                     -                 (9,802)
Payments for exploration and evaluation assets                               (1,624)                (11,749)
Increase in other financial assets                                             3,428                   (724)
Payments for development assets                                              (4,038)                (17,993)
 Net cash used in investing activities                                       (2,234)                (44,138)

Cash Flows from Financing Activities
Proceeds from the issue of shares and options, net of costs                        -                  53,631
Share issuance costs                                                               -                 (2,221)
Proceeds received from BHE                                                         -                  20,000
Repayment of borrowings                                                     (12,355)                   (157)
Proceeds from borrowings                                                      10,664                   4,897
Finance lease repayments                                                        (54)                   (911)
Net cash (used in) / generated by financing activities                       (1,745)                  75,239

NET DECREASE IN CASH AND CASH EQUIVALENTS                                   (25,744)                   (756)
Cash and cash equivalents at the beginning of the half-year                   29,938                  19,523
Foreign exchange differences                                                      30                   (475)
Cash and cash equivalents at the end of the half-year         13               4,224                  18,292

The accompanying notes are an integral part of these condensed consolidated financial statements

NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2013

1.   CORPORATE INFORMATION
     The financial report of Coal of Africa Limited ("CoAL" or the "Company") for the half-year ended 31 December 2013
     was authorised for issue in accordance with a resolution of the directors on 9 March 2014. CoAL is a company
     incorporated in Australia and limited by shares, which are publicly traded on the Australian Securities Exchange
     ("ASX"), the AIM market of the London Stock Exchange ("AIM") and the Johannesburg Stock Exchange ("JSE").

     The nature of the operations and principal activities of the Company and its subsidiaries (the "Group" or the
     "Consolidated Entity") are described in the Directors' Report.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     Statement of compliance
     The half-year financial report is a general purpose financial report prepared in accordance with the requirements of the
     Corporations Act 2001 and AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance
     with International Financial Reporting Standard IAS 34 ‘Interim Financial Reporting'. The half-year report does not
     include notes of the type normally included in an annual financial report and should be read in conjunction with the
     most recent annual financial report.

     Basis of preparation
     The half-year condensed consolidated financial statements have been prepared on the basis of historical cost, except
     for the revaluation of financial instruments. Cost is based on the fair values of the consideration given in exchange for
     assets.

     All amounts are presented in United States dollars, unless otherwise noted.

     The accounting policies and methods of computation adopted in the preparation of the half-year financial report are
     consistent with those adopted and disclosed in the company's 2013 annual financial report for the financial year ended
     30 June 2013, except for the impact of the Standard and Interpretations described below. These accounting policies
     are consistent with the Australian Accounting Standards and with International Financial Reporting Standards ("IFRS").
     The Group has revised the presentation of its condensed consolidated financial statements from those reported as at
     and for the half-year ended 31 December 2012 to take into account the decision to classify its thermal assets as
     operations held for sale. These revisions had no impact on net loss, total assets or total equity.

     The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
     Standards Board ("the AASB") that are relevant to their operations and effective for the current reporting period.
     New and revised Standards and amendments thereof and Interpretations effective for the current half-year that are
     relevant to the Group include:

     - AASB 10 'Consolidated Financial Statements'
     - AASB 11 ‘Joint Arrangements'
     - AASB 12 ‘Disclosure of Interests in Other Entities'
     - AASB 127 ‘Separate Financial Statements'
     - AASB 13 ‘Fair value Measurement'
     
     The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to the Group's
     accounting policies and has no effect on the amounts reported for the current or prior half-years. However, the
     application of AASB 12 has resulted in changes to the Group's presentation of, or disclosure in, its half-year financial
     statements.

     AASB 12 requires the extensive disclosure of information that enables users of financial statement to evaluate the
     nature of, and risks associated with, interest in other entities and the effects of those interests on its financial position,
     financial performance and cash flows.

     In general, the application of AASB 12 has resulted in more extensive disclosure in the half-year report.
     AASB 13 Fair value measurement, which has been issued and is effective for accounting periods beginning on or after
     1 January 2013, establishes a single source of guidance under accounting standards for all fair value measurements.
     AASB 13 does not change when an entity is required to use fair value, but rather provides guidance on how to
     measure fair value under AASBs when fair value is required or permitted. The application of AASB 13 did not have a
     material impact on the amounts recognised in the Consolidated Interim Financial Statements.

3.   GOING CONCERN
     These condensed consolidated financial statements have been prepared on the going concern basis, which
     contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in
     the normal course of business.

     The Consolidated Entity has incurred a net loss after tax for the 6 months ended 31 December 2013 of US$46.3
     million (31 December 2012: loss of US$111.7 million), including a non-cash impairment of US$16.5 million on the
     Mooiplaats Colliery, realised and unrealised foreign exchange losses of US$12.6 million and depreciation and
     amortisation charges of US$1.3 million. During the 6 months ended 31 December 2013, net cash outflows from
     operating activities were US$21.8 million (31 December 2012 net outflow: US$31.8 million) and net cash outflows from
     investing activities were US$2.2 million (31 December 2012 net outflow: US$44.1 million). As at 31 December 2013
     the Consolidated Entity had a net current liability position of US$37.3 million (30 June 2013: net current assets of
     US$13.8 million), excluding assets and liabilities classified as held for sale.

     As part of the process to raise additional funding for the business during the reporting period, the Company has performed
     the following fundraising activities:

     - In October 2013, the Consolidated Entity secured a working capital facility with Investec Bank Limited for ZAR210 million
       (US$20.0 million) of which ZAR107 million (US$10.2 million) was drawn down on 30 October 2013. Refer to Note 10 for further
       deatails of the facility.

     During the period ended 31 December 2013 and up to the date of this report the Company also identified certain key deliverables
     to ensure that the Consoldiated Entity continues as a going concern. These include:

     - The sale of the Woestalleen Complex was finlaised following receipt of Section 11 approval from the Department of Mineral
       Resources on 31 January 2014. The sale consideration of ZAR80 million (US$7.6 million) was received on 6 March 2014;
     - The Company commenced a process for the sale of the Mooiplaats Colliery; and
     - The Company commenced negotiations with Rio Tinto with regard to the payment of US$30 million (refer NOte 9) that will become
       due within the next 12 months.

     Over the next three to twelve months, the Directors have identified certain key deliverables to ensure that the Consolidated 
     Entity continues as a going concern. The ability of the Consolidated Entity to continue as a going concern and to pay their debts 
     as and when they fall due is dependent on:

     - The successful conclusion of additional funding from either financial institutions or the equity markets to meet planned 
       commitments;
     - The successful conclusion of negotiations with Rio Tinto with respect to the timing of the settlement of the US$30.0 million
       liability in order to match the Company's available cash resources; and
     - The sale of other non-core assets during the next twelve months (as contemplated in Note 11) including the release of the 
       associated cash backed rehabilitation guarantees for these assets and the receipt of proceeds from the sale of other financial 
       assets.

     At the date of this report and having considered the above factors, the Directors are confident that the Consolidated Entity
     will achieve the matters set out above and accordingly will be able to continue as a going concern.

     In the event that the Consolidated Entity does not achieve successful outcomes in relation to the matters set out
     above, significant uncertainty would exist as to the ability of the Consolidated Entity to continue as a going concern and, 
     therefore, the Consolidated Entity may be unable to realise its assets and discharge their liabilities in the normal course of 
     business and at the amounts stated in the financial report.

     The half-year financial report does not include adjustments relating to the recoverability and classification of recorded asset
     amounts, nor to the amounts and classification of liabilities that might be necessary should the Consolidated Entity not continue 
     as a going concern.

4.   DIVIDENDS
     No dividend has been paid or is proposed in respect of the half-year ended 31 December 2013 (2012: None).

5.   ISSUED CAPITAL
                                                                    31 Dec 2013
                                                                          $'000

     1,048,368,613 (2012: 800,951,043) fully paid ordinary shares       935,891

     There were no changes to the issued capital during the half-year.

     Fully paid ordinary shares carry one vote per share and carry the right to dividends.

     Options

     The following unlisted options to subscribe for ordinary fully paid shares are outstanding at 31 December 2013:

    Number Issued  Exercise Price        Expiry Date
        3,000,000          A$2.74        30 November 2014
          818,500          A$1.90        30 June 2014
        2,500,000          A$1.20        9 November 2015
               1*         GBP0.60        1 November 2014
        1,441,061          A$1.40        30 September 2015
        2,670,000         ZAR7.60        30 June 2016
        3,500,000         GBP0.25        30 November 2015
     20,000,000**         ZAR1.32        21 October 2018

     *  1 Option to subscribe for 50 million ordinary shares for 60 pence each between 1 November 2010 and
        1 November 2014 as approved by shareholders on 22 April 2010.

     ** Issued to Investec as part of the short term bridging facility and vest six months after granting.

6.   DEVELOPMENT, EXPLORATION AND EVALUATION ASSETS
                                                                                              31 Dec 2013
                                                                                                    $'000
     Development, exploration and evaluation assets comprise:

     Exploration and evaluation assets                                                            144,148
     Development assets                                                                           130,042
     Balance at end of period                                                                     274,190

     A reconciliation of development, exploration and evaluation assets is presented below:

     Exploration and evaluation assets
     Balance at beginning of period                                                               148,131
     Additions                                                                                      1,806
     Foreign exchange differences                                                                 (5,789)
     Balance at end of period                                                                     144,148

     Development assets
     Balance at beginning of period                                                               130,947
     Additions                                                                                      6,302
     Foreign exchange differences                                                                 (7,207)
     Balance at end of period                                                                     130,042

     The development asset, comprising the Vele project, has been assessed for impairment by comparing the carrying
     value against the value-in-use calculations of the project.

     Value-in-use is calculated based on the present value of cash flow projections over the expected life of the
     development project. The discount rate applied in the value-in-use is 10.33% (30 June 2013 - 10%).

     Based on the value-in-use projection, no impairment has been recognised on the Vele development asset.

     Recoverability of the carrying value of interests in exploration and development assets is subject to the 
     successful development and exploitation of the exploration and development properties or alternatively, the 
     sale of these tenements at amounts at least equal to the book values. The ability of the Consolidated Entity    
     to fund the successful development and exploitation of the exploration and development properties is dependent
     on the going concern assumptions set out in Note 3 'Going Concern'.

7.   PROPERTY, PLANT AND EQUIPMENT

                                        Mining      Land and      Leasehold         Motor         Other       Total
                                     property,     buildings       improve-      vehicles
                                     plant and                        ments
                                     equipment
                                         $'000         $'000          $'000         $'000         $'000       $'000
     December 2013
     Cost
     At beginning of period                465        17,481            572           888         2,178      21,584
     Additions                               -             9              5             -             1          15
     Foreign exchange                     (28)       (1,036)           (32)          (53)         (156)     (1,305)
     At end of period                      437        16,454            545           835         2,023      20,294

     Accumulated depreciation
     At beginning of period                166           406            517           269         1,380       2,738
     Depreciation charge                    23           252             52           132           266         725
     Exchange differences                 (12)          (34)           (32)          (21)          (89)       (188)
     At end of period                      177           624            537           380         1,557       3,275

     Net carrying value at end of 
     period                                260        15,830              8           455           466      17,019

     June 2013
     Cost
     At beginning of year              427,898        24,348            678         1,839         2,817     457,580
     Additions                           3,626           449              -           340           428       4,843
     Transfers                               -         (929)              -             -             -       (929)
     Assets held for sale            (376,955)       (2,608)              -         (956)         (573)   (381,092)
     Exchange differences             (54,104)       (3,779)          (106)         (335)         (494)    (58,818)
     At end of year                        465        17,481            572           888         2,178      21,584

     Accumulated
     depreciation
     At beginning of year              188,777         1,325            462           694         1,445     192,703
     Amortisation                       13,577             -              -             -             -      13,577
     Depreciation charge                11,968         1,135            142           244           666      14,155
     Assets held for sale            (176,290)       (1,741)              -         (530)         (432)   (178,993)
     Exchange differences             (37,866)         (313)           (87)         (139)         (299)    (38,704)
     At end of year                        166           406            517           269         1,380       2,738

     Accumulated Impairment
     At beginning of year              123,236             -              -             -             -     123,236
     Impairment charge                  48,545             -              -             -             -      48,545
     Assets held for sale            (166,399)             -              -             -             -   (166,399)
     Exchange differences              (5,382)             -              -             -             -     (5,382)
     At end of year                          -             -              -             -             -           -

     Net carrying value at end of
     year                                 299         17,075             55           619           798      18,846

8.   ASSETS HELD FOR SALE
                                                                 31 Dec 2013    30 June 2013
                                                                       $'000           $'000
     Carrying amounts of
     Holfontein Investments Proprietary Limited (‘Holfontein')             -               -
     Langcarel Proprietary Limited (‘Mooiplaats')                     19,040          34,934
     NuCoal Mining Proprietary Limited (‘Woestalleen')               (1,532)             988
                                                                      17,508          35,922
     Assets classified as held for sale
     Holfontein                                                            -               -
     Mooiplaats                                                       22,802          55,996
     Woestalleen                                                       9,430          15,097
                                                                      32,232          71,093
     Liabilities associated with assets held for sale
     Holfontein                                                            -               -
     Mooiplaats                                                      (3,762)        (21,062)
     Woestalleen                                                    (10,962)        (14,109)
                                                                    (14,724)        (35,171)

                                                                      17,508          35,922
     Holfontein

     The Company has signed an Option Agreement to dispose of the asset. The option holder paid ZAR5.0 million
     (US$0.5 million) in December 2013. The option grants the holder an exclusive right to purchase the Holfontein
     equity and claims for ZAR50.0 million (US$4.8 million) for one year which can be extended on payment of further
     option fees.

     Mooiplaats

     As described in Note 11, the Company is seeking to dispose of its thermal assets which include the Mooiplaats
     Colliery. The Company expects to recover the carrying value through the disposal of the project.

     The major classes of assets and liabilities of Mooiplaats at the end of the reporting period are as follows:

     Assets classified as held for sale 
     Property, plant and equipment             17,369   35,100
     Other financial assets                     2,112    2,043
     Restricted cash                            1,486    1,580
     Inventories                                1,555    2,021
     Trade and other receivables                  123    9,267
     Cash and cash equivalents                    157    5,985
                                               22,802   55,996
     Liabilities classified as held for sale
     Interest bearing liabilities                   -   12,769
     Provisions                                 2,943    3,414
     Trade payables and accrued expenses          819    4,879
                                                3,762   21,062
 
     Net assets of Mooiplaats                  19,040   34,934

     Woestalleen
     
     CoAL had agreed to sell the Woestalleen processing complex and the undeveloped Opgoedenhoop mining right.

     During the six months ended December 2013, the Company made good progress in satisfying the suspensive
     conditions for the disposals and at the end of the period, only the conditions requiring ministerial consent in terms of
     Section 11 of the Mineral and Petroleum Resources Development Act remained outstanding. The Section 11 with
     respect to the Woestalleen processing complex was received subsequent to the period (refer Note 15).

     The major classes of assets and liabilities of Woestalleen at the end of the reporting period are as follows:

                                                                                          31 Dec 2013           30 June 2013
                                                                                                $'000                  $'000

     Assets classified as held for sale
     Property, plant and equipment                                                                565                    600
     Other financial assets                                                                     2,947                  3,133
     Restricted cash                                                                              556                    578
     Inventories                                                                                2,745                  3,412
     Trade and other receivables                                                                2,617                  4,416
     Cash and cash equivalents                                                                      -                  2,958
                                                                                                9,430                 15,097
     Liabilities classified as held for sale
     Interest bearing liabilities                                                                 866                    921
     Provisions                                                                                 8,576                  7,422
     Trade payables and accrued expenses                                                        1,520                  5,766
                                                                                               10,962                 14,109

     Net (liabilities) / assets of Woestalleen                                                (1,532)                    988

9.   DEFERRED CONSIDERATION

     Notwithstanding that the Company is currently in negotiations with Rio Tinto to defer the payments with respect to the
     US$30.0 million that is due in October 2014, the payable has been reflected as current in the balance sheet as at 
     31 December 2013, as no formal agreement to defer the payment has been reached yet.
     
     The Company is confident that they will be successful in negotiation the deferment of the payment.

10.  BORROWINGS

     Borrowings are made up as follows:
                                          31 Dec 2013   30 Jun 2013
                                                $'000         $'000
     Investec Bank facility                     8,954             -
     Other                                        206         2,088
                                                9,160         2,088

     The Company, through its wholly owned subsidiary GVM Metals Administration (South Africa) (Pty) Ltd has secured
     an 18-month, ZAR210 million (approximately US$20.0 million) working capital facility from Investec Bank Limited
     (Investec).

     The principal terms of the loan include a margin of 500 basis points, pledge and cession of the shares and loan
     accounts in the major operating subsidiaries of the Group. In addition, CoAL will issue 20 million options to Investec
     which are exercisable at ZAR1.32 before October 2018.

     The effective interest rate is 21.02% based on the expected payments.

     The fair value of the option component was determined using the following assumptions:

     - a risk-free rate of 6.6%
     - a volatility index of 55.0%
     - a dividend yield of 0%
     - the options vest on 21 April 2014.
                                                                    31 Dec 2013
                                                                          $'000
     Investec facility received                                          10,234
     Transaction costs - Option component accounted for in equity       (1,430)
                                                                          8,804
     Adjustment for effective interest                                      150
                                                                          8,954

     The facility is subject to certain covenants associated with a facility of this nature. The covenants include amongst
     others, maintaining a certain minimum cash level. As at the date of this report, there have been no breaches of 
     covenants applicable to the loan.

11. OPERATIONS HELD FOR SALE

11.1 Holfontein (Pty) Ltd (‘Holfontein')

     The Company has signed an Option Agreement to dispose of the asset. The option holder paid ZAR5.0 million
     (US$0.5 million) in December 2013. The option grants the holder an exclusive right to purchase the Holfontein equity and
     claims for ZAR50.0 million (US$4.8 million) for one year which can be extended on payment of further option fees.

11.2 Disposal of NuCoal Mining (Pty) Ltd (‘Woestalleen')

     CoAL had agreed to sell the Woestalleen processing complex and the undeveloped Opgoedenhoop mining right.
     During the six months ended December 2013, the Company made good progress in satisfying the suspensive
     conditions for the disposals and at the end of the period, only the conditions requiring ministerial consent in terms of
     Section 11 of the Mineral and Petroleum Resources Development Act remained outstanding. The Section 11 with
     respect to the Woestalleen processing complex was received subsequent to the period (refer Note 15).
     
     Details of the assets and liabilities held for sale are disclosed in Note 8.

11.3 Plan to dispose of Langcarel (Pty) Ltd (‘Mooiplaats')

     The disposal process continued during the period and formal offers from prospective buyers are expected by the end
     of the March 2014 quarter, with disposal agreements thereafter. The Company expects to complete this transaction
     during the 2014 calendar year.

11.4 Analysis of loss for the year from operations classified as held for sale

     The combined results of the operations held for sale included in the loss for the period are set out below. The
     comparative losses and cash flows from operations held for sale have been re-presented to include those operations
     classified as held for sale in the current period.
                                                                           Six months     Six months
                                                                                ended          ended
                                                                          31 Dec 2013    31 Dec 2012
                                                                                $'000          $'000
     Loss for the period from operations held for sale
     Revenue                                                                    1,778         87,255
     Other gains                                                                1,501            549
                                                                                3,279         87,804
     Expenses                                                                (24,585)      (162,538)
     Loss before tax                                                         (21,306)       (74,734)
     Attributable income tax credit                                                 -          7,851
     Loss for the period from operations held for sale (attributable to
     owners of the parent)                                                   (21,306)       (66,883)
  
     Cash flows from operations held for sale
     Net cash outflows from operating activities                              (3,479)       (20,425)
     Net cash outflows from investing activities                                  329        (4,222)
     Net cash outflows from financing activities                             (12,409)          3,829
     Net cash outflows                                                       (15,559)       (20,818)

     These operations have been classified and accounted for as a
     disposal group held for sale since 30 June 2013 (see Note 8).

12. LOSS PER SHARE
                                                                                 Six months         Six months
                                                                                      ended              ended
                                                                                31 Dec 2013        31 Dec 2012
                                                                            Cents per share    Cents per share
     Basic loss per share
     From continuing operations                                                        2.38               5.77
     From operations held for sale                                                     2.04               8.62
                                                                                       4.42              14.39

12.1 Basic loss per share
                                                                                      $'000              $'000
     Loss for the period attributable to owners of the parent                      (46,296)          (111,670)
     Loss for the period from operations held for sale                               21,306             66,883
     Loss used in the calculation of basic loss per share from continuing
     operations                                                                    (24,990)           (44,787)

                                                                                ‘000 shares        ‘000 shares
     Weighted number of ordinary shares
     Weighted average number of ordinary shares for the purposes of basic
     loss per share                                                               1,048,368            775,886

12.2 Diluted loss per share

     Diluted loss per share is calculated by dividing loss attributable to owners of the Company by the weighted average
     number of ordinary shares outstanding during the period plus the weighted average number of diluted ordinary shares
     that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

     As at 31 December 2013, 21,987,489 options (31 December 2012 – 15,929,562 options) and the 20 million options
     issued to Investec were excluded from the computation of the loss per share as their impact is anti-dilutive.
     Furthermore at 31 December 2013 and 2012 one option issued to Firefly to acquire 50 million shares (see note 5)
     was also excluded from the computation of the loss per share as the impact is anti-dilutive.

     Headline loss per share (In line with JSE listing requirements)
     The calculation of headline loss per share at 31 December 2013 was based on the headline loss attributable to
     ordinary equity holders of the Company of US$29.8 million (2012: US$61.7 million) and a weighted average number of
     ordinary shares outstanding during the period ended 31 December 2013 of 1,048,368,613 (2012: 775,886,462).

     The adjustments made to arrive at the headline loss are as follows:

                                                                  Six months     Six months
                                                                       ended          ended
                                                                 31 Dec 2013    31 Dec 2012
                                                                       $'000          $'000
     Loss for the period attributable to ordinary shareholders        46,296        111,670
     Adjust for:
     Impairment losses                                              (16,453)       (50,000)
     Headline earnings                                                29,843         61,670

     Headline loss per share (cents per share)                          2.85           7.95

13. CASH AND CASH EQUIVALENTS
                                                                                 31 December   30 June
                                                                                        2013      2013
                                                                                       $'000     $'000
    Bank balances                                                                      4,067    20,995
    Bank balances included in a disposal group held for sale (refer Note 8)              157     8,943
                                                                                       4,224    29,938

    Restricted cash                                                                    3,939     4,187
    Restricted cash included in a disposal group held for sale (refer Note 8)          2,042     2,158
                                                                                       5,981     6,345
14. CONTINGENT LIABILITIES

    In accordance with normal industry practice, the Company has agreed to provide financial support to its controlled
    entities.

    The Group is currently involved in litigation as outlined below (US$ amounts presented within have been computed
    using the exchange rate as at 31 December 2013 unless otherwise stated):

    Envicoal Proprietary Limited / NuCoal Mining Proprietary Limited
    Envicoal launched arbitration proceedings against NuCoal claiming that NuCoal failed to deliver coal as prescribed in
    terms of the agreement concluded between the parties. As a result, Envicoal has claimed damages to the value of
    ZAR115.7 million (US$11.0 million), alternatively ZAR50.6 million (US$4.8 million). Both amounts exclude VAT and
    interest. The arbitration proceedings have commenced but were postponed until April 2014.

    The Group has contingent liabilities as listed below:

    Ferret Mining Proprietary Limited
    During the period, Ferret's 26% shareholding in Mooiplaats Mining Limited was re-instated. Although they are not
    entitled to any assets or claims in the Mooiplaats group, they are entitled to receive ZAR10.0 million (US$1.0 million)
    upon the successful disposal of the Mooiplaats Colliery.

    There are no other significant contingent liabilities as at 31 December 2013.

15. EVENTS SUBSEQUENT TO REPORTING DATE

   -    On 31 January 2014, the Department of Mineral Resources ("DMR") granted Section 11 approval in terms of the
        MPRDA for the disposal of Woestalleen Complex. The sale consideration of ZAR80 million (US$7.6 million) was
        received on 6 March 2014.
   -    David Brown was appointed as CEO and Executive Director and Bernard Pryor was appointed Chairman, effective
        1 February 2014.
   -    Appointment of Sedgman as the engineer for the FEED of the Vele Colliery plant modification.

16. SEGMENTAL INFORMATION
    The Group has three reportable segments: Exploration, Development and Mining.

    The Exploration segment is involved in the search for resources suitable for commercial exploitation, and the
    determination of the technical feasibility and commercial viability of resources. As at 31 December 2013, projects
    within this reportable segment include three exploration and development stage coking and thermal coal complexes,
    namely the Chapudi Complex (which comprises the Chapudi project, the Chapudi West project and the
    Wildebeesthoek project), the Soutpansberg Complex (which comprises the Voorburg project, the Mt Stuart project and
    the Jutland project) and the Makhado Complex (comprising the Makhado project, the Makhado Extension project and
    the Generaal project).

    The Development segment is engaged in establishing access to and commissioning facilities to extract, treat and
    transport production from the mineral reserve, and other preparations for commercial production. As at 31 December
    2013 projects included within this reportable segment include one coking coal project, namely the Vele Colliery, in the
    early operational and development stage.

    The Mining segment is involved in day to day activities of obtaining a saleable product from the mineral reserve on a
    commercial scale and included the Mooiplaats Colliery and the Woestalleen Colliery. As of 30 June 2013 the
    Mooiplaats Colliery and the Woestalleen Colliery has been classified as operations held for sale after a decision by the
    Company to dispose of its thermal assets (refer Notes 8 and 11).

    The Group evaluates performance on the basis of segment profitability, which represents net operating (loss) / profit
    earned by each reportable segment.

    Each reportable segment is managed separately because, amongst other things, each reportable segment has
    substantially different risks.

    The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, ie at current
    market prices.

    The Group's reportable segments focus on the stage of project development and the product offerings of coal mines in
    production.
                                                                                  Operations
                                                        Continuing operations    held-for-sale
     
     For the six months ended                      Exploration     Development          Mining     Total
     31 December 2013                                    $'000           $'000          $'000      $'000

     Revenues from external customers(1)                     -               -          1,778      1,778
     Inter-segment revenues                                  -               -          3,755      3,755
     Revenue                                                 -               -          5,533      5,533

     Segment loss                                          148           1,196         21,306     22,650
     Items included within the Group's measure of
     segment profitability
     - Depreciation and amortisation                       10              33              -         43
     - Impairment                                           -               -         16,453     16,453
     - Finance cost / (income) (net)                        3              34          (193)      (156)

     1. Revenues represent sale of product
     Segment assets                                    151,548         134,104         32,232    317,884
     Items included within the Group's measure of
     segment assets
     - Additions to non-current assets                  1,806           6,302              -      8,108
     Segment liabilities                                 2,276           4,661         14,724     21,661

                                                                                 Operations     
                                                       Continuing operations    held-for-sale   

     For the six months ended                      Exploration    Development         Mining         Total
     31 December 2012                                    $'000          $'000          $'000         $'000
  
     Revenues from external customers(1)                     -              -         87,255        87,255
     Inter-segment revenues                                  -              -         27,316        27,316
     Revenue                                                 -              -        114,571       114,571

     Segment loss                                          521            761         74,732        76,014
     Items included within the Group's measure of
     segment profitability
     - Depreciation and amortisation                        6             35         18,731        18,772
     - Impairment                                           -              -         50,000        50,000
     - Finance cost (net)                                   -              -            844           844

     1. Revenues represent sale of product
     Segment assets                                    169,727        146,588        106,715       423,030
     Items included within the Group's measure of
     segment assets
     - Additions to non-current assets                  4,219         15,288          1,984        21,491
     Segment liabilities                                 6,339          8,420         87,831       102,590

     Reconciliations of the total segment amounts to respective items included in the consolidated financial statements are
     as follows:

                                                  Six months     Six months
                                                       ended          ended
                                                 31 Dec 2013    31 Dec 2012
                                                       $'000          $'000
 
     Total loss for reportable segments               22,650         76,014
     Reconciling items:
     Unallocated corporate (income) / costs            9,841         15,343
     Depreciation                                      1,243            458
     Foreign exchange loss                            12,562         19,855
     Loss before taxation                             46,296        111,670
 
     Total segment assets                            317,884        423,030
     Reconciling items:
     Unallocated property, plant and equipment        12,991         19,156
     Intangible assets                                15,087         18,845
     Other financial assets                              271          6,331
     Other receivables                                 3,358          4,154
     Unallocated current assets                       10,882         28,228
     Total assets                                    360,473        499,744

     Total segment liabilities                        21,661        102,590
     Reconciling items:
     Investec facility                                 8,954              -
     Unallocated liabilities                          35,330         60,104
     Total liabilities                                65,945        162,694
  
17.   FINANCIAL INSTRUMENTS
      This note provides information about how the Group determines fair values of various financial assets and financial
      liabilities.

17.1  Fair value of the Group's financial assets and financial liabilities that are measure at fair value on a recurring basis
      Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting
      period. The following table gives information about how the fair values of these financial assets and financial liabilities
      are determined (in particular, the valuation technique(s) and inputs used).

                                                                                               Relationship
                                                                  Valuation                         of
                                                                technique(s)      Significant  unobservable
     Financial assets /                             Fair value    and key        unobservable  inputs to fair
     financial liabilities      Fair value as at    hierarchy     input(s)         input(s)       value

                              31 Dec       30 Jun
                               2013         2013

1.   Other financial         Assets -    Assets -   Level 2      Value          N/A            N/A
     assets – Unlisted       $2.7m       $6.3m                   certificate
     Investments                                                 obtained
                                                                 from
                                                                 investment
                                                                 institution

2.   Other financial         Assets -    Assets -   Level 1      Quoted         N/A            N/A
     assets – Listed         nil         $3.4m                   prices in an
     Investments                                                 active
                                                                 market

3.   Receivables –           Assets -    Assets -   Level 1      Quoted         N/A            N/A
     Listed Investments      $2.1m       nil                     prices in an
                                                                 active
                                                                 market

17.2 Fair value of the Group's financial assets and financial liabilities that are not measured at fair value on a recurring
     basis (but fair value disclosures are required)

     Except as detailed in the following table, the directors consider that the carrying amounts of financial assets and
     financial liabilities recognised in the condensed consolidated financial statements approximate their fair values.

                                                        31 Dec 2013          30 Jun 2013
  
                                                     Carrying      Fair   Carrying      Fair
                                                       amount     value     amount     value
                                                        $'000     $'000      $'000     $'000
     Financial liabilities
     Financial liabilities held at amortised cost:
     -   Loans from other entities                      8,954     8,804          -         -

DIRECTORS' DECLARATION

The Directors declare that in the directors' opinion,

    1.      The condensed financial statements and notes of the consolidated entity are in accordance with the
            following:

            a.      complying with accounting standards and the Corporations Act 2001; and

            b.      giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and
                    of its performance for the half-year ended on that date.

    2.      There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
            become due and payable.

    This declaration is made in accordance with a resolution of the Board of Directors, made pursuant to section 303(5)
    of the Corporations Act 2001.

    On behalf of the Directors
    
    David Brown
    Director

    Dated at Johannesburg, South Africa, this 9th day of March 2014.

AUDITORS' INDEPENDENCE DECLARATION

The auditors' independence declaration can be viewed in the pdf-version of the interim financial statements on the Company's
website: www.coalofafrica.com

INDEPENDENT AUDITORS' REVIEW REPORT

The independent auditors' review report can be viewed in the pdf-version of the interim financial statements on the Company's
website: www.coalofafrica.com


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